Moldova remains one of the poorest countries in Europe despite recent progress from its small economic base. It enjoys a favorable climate and good farmland but has no major mineral deposits. As a result, the economy depends heavily on agriculture, featuring fruits, vegetables, wine, and tobacco. Moldova must import almost all of its energy supplies. Moldova's dependence on Russian energy was underscored at the end of 2005, when a Russian-owned electrical station in Moldova's separatist Transnistria region cut off power to Moldova and Russia's Gazprom cut off natural gas in disputes over pricing. In January 2009, gas supplies were cut during a dispute between Russia and Ukraine. Russia's decision to ban Moldovan wine and agricultural products, coupled with its decision to double the price Moldova paid for Russian natural gas, slowed GDP growth in 2006-07. However, in 2008 growth exceeded 7%, boosted by Russia's partial removal of the bans, solid fixed capital investment, and strong domestic demand driven by remittances from abroad. The country reversed course again in 2009, due to the onset of the global financial crisis and poor economic conditions in Moldova's main foreign markets, which dramatically decreased remittances. GDP fell about 9%. Unemployment almost doubled. In 2009 inflation was a record low of 0.4%. Moldova's IMF agreement expired in May 2009. In fall 2009, the IMF allocated $186 million to Moldova to cover its immediate budgetary needs, and the government signed an new agreement with the IMF in January 2010 for a program worth $574 million. Economic reforms have been slow because of corruption and strong political forces backing government controls. Nevertheless, the government's primary goal of EU integration has resulted in some market-oriented progress. The granting of EU trade preferences and increased exports to Russia will encourage higher growth rates, but the agreements are unlikely to serve as a panacea, given the extent to which export success depends on higher quality standards and other factors. The economy is likely to have a modest recovery in 2010, but remains vulnerable to political uncertainty, weak administrative capacity, vested bureaucratic interests, higher fuel prices, poor agricultural weather, and the skepticism of foreign investors as well as the presence of an illegal separatist regime in Moldova's Transnistria region....More..